House Behind a House: Sub-dividing

All your subdivision questions answered by Andrew Owen, Senior Development Consultant at Developments by Dale Alcock

What properties are best for subdividing?

If you have a large block with the right zoning, retaining your current home and building a house behind it is an ideal situation. But the first step is to make a call to your local council to check the R-Code (Residential Planning Code) specifications.

Then you need to cross-reference the R-Code with the size of your block to see if you meet the minimal lot requirements for a subdivision. If you keep your existing house and build a new property behind it, you also need a 3m-wide minimum access for the additional driveway.

Arguably, the next step is to speak to an expert. Property development is not for the fainthearted and it can be easy to misinterpret the R-Code specifications. Plus variances between the town planning schemes of local authorities can also be confusing.

A professional company will assess the viability of your project and advise on the best possible development solution for your block.

What areas have the highest demand for in-fill housing?

There is still solid demand in Perth for subdivided blocks close to the city. Demand appears strongest within a 20km radius of the city. The demand is fueled by a number of factors, including proximity to inner-city amenities and facilities, and the fact that many people working in the city want to minimize their travel-to-work time.

What are some of the factors driving the trend to subdivide?

There are various factors influencing the current trend to subdivide larger residential blocks, including the opportunity to make a profit by selling a parcel of land or two, or free up the equity in a family home to use in retirement.

Some homeowners are also considering the investment opportunities linked with subdividing, and others may have grown up in an area and, as a result, want to stay in the suburb to remain close to parents and family members.

In addition, many families have a preference to live in smaller homes and be closer to the CBD to enable them to spend less time travelling back and forth to work.

Is it more profitable to build a house on the subdivision and then sell it, or are people generally better to sell the block bare?

This is a challenging question as it really does depend on an individual’s finances.

The bottom line is that homeowners will realise more potential if they are able to subdivide and build a house on the block, as opposed to selling the parcel of land separately. This latter option means owners need to find a buyer with a vision for what can be built on the land, and also someone who is happy to rent while they build their own home.

By comparison, the decision to build enables people to control what is constructed in their backyard. What’s more, when building a house on the block and then selling it, homeowners can wrap the subdividing costs into the build costs.

The bottom line is, if you can fund the build you’ll generally make more profit.

Generally speaking, how much can a property owner expect to profit from sub-dividing the spare land on their block?

Again, this is a difficult question to answer because there are so many variables. Basically, the more equity a homeowner has in their house, the better they will do in terms of profit.

It also comes down to location, location, location. If you’re in an area that is in high demand and you are in a great position to maximize your return on investment.

I’m sure the profit made depends on a variety of factors. What are some of the factors that can affect how much money can be made from subdividing?
Firstly, it’s important to flag that the property development process is a lot more complicated than just building a home on a standard suburban block. Before you call in the bobcat, my advice is to do your homework to ensure you maximise the success of your development.

Also, consider engaging a professional company to assess the viability of your project and then have a design team create the best possible development solution for your block. This is how you will automatically make the most profit from your subdivision.

Is subdividing land a straight forward process? If not, why not?

There are a number of different ways to subdivide your block. You need to decide which of these options best fits your situation.

Battleaxe: A division of the existing block, creating a rear property with side driveway access.
Side-by-side: A length-wise division allowing two homes to have street frontage.
Multi-unit: Anything over two dwellings, including a triplex or quadruplex.

Basically, subdividing can be relatively straightforward for people who are experienced or who have carefully done their homework. Importantly, it usually takes six months from when the process begins to obtaining two titles for your block. However, if there is a hiccup along the way or something has not been accounted for, then the process can get bumpy.

That’s why people choose to engage companies like Developments by Dale Alcock that can look after the entire subdivision including, council approvals, R-Codes, home designs, and regulatory authorities. They can even find out if there are road-widening plans for your street.

What is your top advice for a homeowner who is considering subdividing?

Put simply, I’d say it’s all about communication. Talk to the professionals, talk to friends who have subdivided and talk to the local council. Basically, do your research and homework before you make any decisions.

What are the biggest property development mistakes people can make?

The bottom line is that calling in the bobcat before doing the appropriate research or due diligence is a mistake. It’s not as simple as identifying a spare 300sqm in your backyard and visiting new homes in display villages. Being informed really is the key when it comes to subdividing.

For more information about subdividing have a chat to our development and subdivision expert Andrew!
Contact Andrew Owen on 0421 219 000 or email andrewo@dalealcock.com.au